Performance Recap: September 2015

The last two months were particularly rough on global equity markets, which is not an ideal time to launch a portfolio, other than providing an opportunity to add to positions at lower levels. Overall, our portfolio underperformed in September by a considerable margin, but since its August launch, we have outperformed our benchmark by 9.1 percent in Canadian dollars and 10.1 percent in U.S. dollars.

Canadian Dollar

Aug-2015

Sep-2015

Cumulative

Portfolio Performance1

10.9%

(7.9%)

2.1%

Benchmark Performance2

(4.2%)

(3.0%)

(7.0%)

 

U.S. Dollar

Aug-2015 Sep-2015

Cumulative

Portfolio Performance1

10.7%

(9.1%)

0.6%

Benchmark Performance2

(5.5%)

(4.3%)

(9.5%)

While in absolute return terms, we are unhappy with the performance of the portfolio, we can’t be disappointed overall when compared to the benchmark index exposure. Our September returns were greatly impacted by poor performance among three new additions to the portfolio, High Liner Foods, NextEra Energy Partners and Abengoa Yield PLC. While we believe that these stocks represented good value at the time of purchase based on fundamentals, they have since slipped further. We still remain bullish on all three of these holdings, as we believe they all offer substantial value to investors at current levels.

 

Canadian Dollar Holding Returns

Ticker

1mn

From Coverage Initiation

Dream Global REIT DRG.UN (TSX)

(6.2%)

(11.3%)

Capstone Infrastructure CSE (TSX)

(2.3%)

1.4%

Surge Energy SGY (TSX)

(2.3%)

41.0%

Westshore Terminals WTE (TSX)

(2.8%)

(1.9%)

High Liner Foods HLF (TSX)

(13.0%)

(13.0%)

NextEra Energy Partners NEP (NYSE)

(15.5%)

(15.5%)

Abengoa Yield PLC ABY (NYSE)

(12.8%)

(12.8%)

Average  

(7.9%)

(1.71%)

 

U.S Dollar Holding Returns

Ticker

1mn

From Coverage Initiation

Dream Global REIT

DRG.UN (TSX)

(7.4%)

(12.6%)

Capstone Infrastructure CSE (TSX)

(3.6%)

(1.0%)

Surge Energy SGY (TSX)

(3.6%)

40.0%

Westshore Terminals WTE (TSX)

(4.1%)

(3.3%)

High Liner Foods HLF (TSX)

(14.2%)

(14.2%)

NextEra Energy Partners NEP (NYSE)

(16.6%)

(16.6%)

Abengoa Yield PLC ABY (NYSE)

(14.4%)

(14.4%)

Average  

(9.1%)

(3.2%)

1 – Our portfolio performance is calculated based on the return that would be experience by an investor in either Canadian or U.S. dollars if they held an equally weighted basket of our buy recommendations, rebalancing monthly and upon any new initiated coverage. Individual security returns are based on their primary exchange listing in their home currency and returns (including dividends) are translated at the month end Bank of Canada noon-day USDCAD rate into the currency of the investor for the purpose of calculating the returns.

2 – Our benchmark returns are a weighted average of the monthly total returns on the S&P 500 and S&P TSX Composite indexes. These two benchmarks are adjusted for the impact in the change in the value of currency, and weighted based on the month end composition of the portfolio between Canadian and U.S. stocks. For example, if the portfolio contains 60% Canadian listed and 40% U.S. listed stocks, the benchmark is weighted 60% to the TSX Composite and 40% to the S&P 500.